Real Madrid signs midfielder Isco from Malaga

Real Madrid secured the transfer of midfielder Francisco “Isco” Alarcon from Malaga on Thursday, adding one of Europe’s most prized young players to its already star-studded squad.

Madrid announced on its website that the 21-year-old Isco had agreed to a five-year contract. He will be presented on Wednesday after a medical exam.

Isco helped Malaga reach the Champions League quarterfinals last season and guided Spain to the European Under-21 title this summer.

Malaga said in a statement that it wanted “to thank Isco and his family for their commitment, implication and impeccable behavior while being a Malaga player.”

Neither club released the financial details of the transfer.

Manchester City was reportedly also interested in drawing Isco away from Malaga, especially after hiring his former coach Manuel Pellegrini. But Madrid club president Florentino Perez could hardly let another desired player slip away after losing the bidding war for Brazil star Neymar to Barcelona.

After Malaga lured him away from Valencia in 2011, Isco quickly blossomed into a well-rounded attacking threat with his incisive passing, skilled dribbling and goal-scoring. He netted 12 goals in all competitions for the Costa del Sol side last season.

Isco will now have to compete for playing time with a group of attacking players that features Cristiano Ronaldo, Mesut Ozil, and Luka Modric, while media reports also point to the possible arrival of Uruguay forward Luis Suarez from Liverpool.

Isco had said this summer that he would have to think long and hard about joining Madrid, where he could get stuck on the bench alongside former world player of the year Kaka and thereby join a list of young Spanish players who failed to earn a spot in Madrid’s rotation like Sergio Canales and Pedro Leon.

Madrid hired Carlo Ancelotti as manager on Wednesday to replace Jose Mourinho after he returned to Chelsea following a season without a major trophy.

The former Paris Saint-Germain, Chelsea and AC Milan coach said at his presentation that Isco was a talented player.

“He is very good,” said Ancelotti. “Spain’s under-21 side has fantastic players, (but) he has the most quality of all of them. Isco can play for any club.”

Isco is Madrid’s second signing this offseason after it paid Bayer Leverkusen to recover right back Daniel Carvajal.

Isco is the last in a growing line of players which includes Santi Cazorla and Nacho Monreal that Malaga have sold over the past year since its Qatari owners drastically changed course after a spending spree to build a team that qualified for the Champions League for the first time in club history.